The real customer of healthcare

Healthcare customer service

Gartner’s Jim Sinur wrote up his recent personal experience in healthcare, Bad Processes are a Stumbling Block to a Good Reputation, and brought up an excellent point about customer service: Who is the ‘customer’ of healthcare delivery? This questions could be the key to bringing healthcare into the 21st Century.

Poor service

Few industries are as far behind in customer service as the delivery of healthcare. How many hours are spent in the waiting room of over-scheduled offices? How many times has care been administered without options or explanations? How often is cost or copay a major factor in choices?

Healthcare has an enormous gap to cross before they can say they’ve joined the customer service world. The biggest challenge that we hear at conferences and from customers is the simple question, “Who is the customer?” In a traditional sense, the customer is the one who choses the service. But in reality, the customer is the one who pays the bill. In the vast majority of cases this is the patient’s employer.

The employer/customer

The first time this is said, it sounds strange. My employer is the customer of my healthcare? Absolutely. Can I be the customer if I don’t actually pay or withhold payment?. No. It can’t be the insurance company, either. By offering healthcare plans to employers, insurers act as the aggregator of services. The insurance company also allows employers to hedge risk and limit cost (through group negotiation with doctors and health networks) but isn’t the customer. So the only party left to be the customer is my employer.

The disconnect

Because my employer is the customer and never interacts with the service provider, there is a fundamental disconnect with customer service. It ends up being no surprise that basic process of delivering service and collecting feedback is broken.

There have been moves to change this, including with Intermountain Healthcare in Salt Lake City, where the network is large enough and the coverage area extensive enough that the employer can engage the service provider in a direct relationship.

When the healthcare team and the true payer are connected, they can begin to do some remarkable things to improve outcomes (keep employees healthier), cut cost (keep employees healthier) and improve day-to-day service (keep employees happy and on the job).

Given where the current system ‘lives’, this is a model to be replicated as part of healthcare reform and creating truly accountable care. But with companies operating in far-flung places and across state and national borders, we’re not quite in a place for this to happen in the near term.


Categories: Customer Service, Healthcare

Author:Chris Taylor

Reimagining the way work is done through big data, analytics, and event processing. There's no end to what we can change and improve. I wear myself out...

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15 Comments on “The real customer of healthcare”

  1. Ron Webb
    December 27, 2012 at 9:20 am #

    I think you might know my bias here, but I basically agree with you on this one. At the end of the day the employer is the ultimate customer of the current healthcare system.

    That being said, you also have the crazy relationship with an intermediary, the payor (insurance company). While the employer is carrying most of the cost (and risk) associated with the odd supply chain, the insurance companies have a lot of influence on what can be charged, what will/won’t be covered, within what timeframe certain events can happen and be covered, not covered, etc. It is just a very odd relationship.

    I do think that we’ll see this system change significantly over the next few years, though. Specifically, I think the employers are going to revolt to some degree. The amount they are paying to cover the health (or sick) benefits of their employees are continuing to grow and they can’t continue to push more of that cost to the employee. If they do require the employee to cover more and more of the cost, the employees will leave to find a better deal from another employer. Plus, the employee can’t really make an impact on the system without significant work on their part to know what is being done to them, what is appropriate, what will be paid (at what level), etc.

    We see other employers working closely with other suppliers to mandate high-quality services, continuous improvement, and appropriate pricing (costs). No employer wants one of their key suppliers to not be able to cover their costs and make a reasonable profit. They know that will force the supplier out of business; which is bad for everyone. But, they are expecting these suppliers to know their costs, manage those, improve the quality of their product or service, and continue to improve (and either reduce costs further or improve services provided).

    Employers will demand this of their healthcare providers. The argument of “these are human lives we are talking about” doesn’t hold water. Employers are doing this with suppliers that provide them products and services that guide airplanes, missiles, buses, and trains. Not to mention require pure chemicals, pharmaceuticals, food, and other life essentials. There is not reason healthcare providers can’t do the same.

    I think you are already seeing providers stepping up to do this. You mention Intermountain. I’d put them out there as a model, as well as a few others. The providers that are able make this shift will become the providers of choice and take their approach into new markets. Other providers should get in the game or be wary.

    • December 27, 2012 at 12:09 pm #

      Thank you for the thoughtful reply, Ron. This is a vexing question. I can see where employers will benefit greatly from a direct relationship with the healthcare network used by their employees. A healthcare provider can manage cost better than an insurance company, for certain.

      • William Johansen
        December 28, 2012 at 9:49 am #

        Chris — I agree with your description of the “current customer” but as patient directed health plans (PDHP) and high deductible health plans (HDHP) continue to gain momentum and cost shifting from employer to employee continues ,,,, the definition of the customer will change in the years ahead. This will cause providers to deliver services at an entirely different level, shifting their accountability from “return to wellness” to the “comprehensive patient experience”. The new patient/customer will take on retail-like and value driven behaviors as well.

        The concept of “patient centricity” will be completely redefined and recalibrated to a level of granularity that provider organizations have not encountered in the past. This is a place where most providers have little experience and where their investments in first generation, “care-giver centric” EMRs will deliver little support.

        Provider organizations are currently comprised of two enterprises ,,, the “clinical enterprise” and the “reimbursement enterprise” ,,,, neither of which were designed to be patient/customer facing or as front line customer service operations Like other major industries entering the customer service arena in the past 50 years, a third layer of operational capability will be required. This is the “customer service enterprise” where its design and infrastructure become responsible for creating and sustaining a comprehensive and seamless customer experience. The current provider shift toward a value based model could lgain valuable insight from the experiences of other industries who have already transformed themselves into service oriented cultures.

        So, while focus on the employer/payer component must continue, providers should not assume that this will continue to be the dominant customer service model. The new model will certainly have retail-like requirements and increased emphasis on seamless business processes and customer facing encounters based on value and perception.


      • Kevin Rotunda
        January 2, 2013 at 9:05 am #

        Hi Chris,
        Great article and subject. My thought though on this is, Yes the employer is the customer, but the patient does not have to choose my facility. Maybe there choices are limited, but ultimately the choice is the patients is still the consumer. The industry does have along way to go in addressing customer service. It seems ironic that a car manufacturer can have fantastic customer service, but when considering a persons life its not the same.

      • January 2, 2013 at 9:16 am #

        Kevin, that is very ironic indeed. Thanks for your comment. The feedback on LinkedIn was strong and seemed personal for many of the comments.

  2. sue peckelis
    January 3, 2013 at 4:15 pm #

    and where does the provider fit in this equation?

    • January 3, 2013 at 4:28 pm #

      Complicated scenario maybe unmatched in any other industry. They were a payee of pharma, until that was recognized as a no-no. They’re an employee of an HMO or medical group and independent contractor of a network or hospital.

  3. Dona Hewitt
    January 7, 2013 at 9:06 am #

    I agree with William. Only in healthcare would a provider perform a very expensive procedure (ie skin biopsy – with surgeon fee and patholigist you are looking at about $1200) without the patient knowing the cost. Would your automechanic do a $1200 repair without your express permission??

    With deductibles at $2500 and up, providers are going to have to start providing a COST at the TIME OF CARE. When patients learn that they can shop around for pathology rates, physician fees, etc, the game will begin to change and prices will come down. Very rarely is something a “got to get it done today” but physicians rarely, if ever, consider the cost to the patient before ordering or suggesting a procedure or test. Buyer beware!!

  4. Doug Evans
    January 7, 2013 at 9:31 am #

    Thanks for the article, Chris. Having gone through a “job transition” several years ago, the topic of tying Healthcare Insurance to an employer is near to my heart… For me, the most stressful part of being between jobs was the threat of losing health coverage for my family (or paying through the nose for COBRA). The ticking of the ‘severance plan benefit clock’ was a constant drone in the back of my mind.
    While I understand the history of this linkage, I’ve always thought it was inefficient for businesses to have their HR / Finance people spending time selecting and contracting with insurance companies.
    And why should my available plans be any better or worse than my neighbors, just because of where I work?

  5. Tom Adamczyk
    January 12, 2013 at 5:25 am #

    Since the employee pays with their time for salary and benefits, and the employer agree to that exchange, that would stand to reason that the employee is the true and only customer of the healthcare facility that he or she chooses to use for the medical services. Your thinking process and those who agree with it, goes directly against the believe of majority of people who are healthcare providers. We see patients as the ultimate customers who are left in a continuous dust of confusion while obtaining their medical services, from the type of testing being performed to who is going to pay for what part of service. And with the out of control shifting of costs to the patient/employee the true identity of the customer emerges more clearly everyday. Pur a face of your loved one in to this equation and thinking and with doubt you will see who the true customer emerges.

  6. Chidi R. Oguh
    January 21, 2013 at 4:12 pm #

    The answer to the question “who is the real healthcare customer?” is not a clear cut answer. this is because they are many variables involved in turning the wheels of the healthcare delivery system.

    Some may take the position that the customer to healthcare service is the patient. This is because the patient presents him/herself to a healthcare provider for a required service. Others may argue that the healthcare provider is the customer. This is because healthcare facilities/providers receive payments from third party payers such as Insurance providers and the Federal government through Medicare and Medicaid funding.

    Several others will take the position that the third party payers are the actual customers because they (third party payers) decide what is paid and for what services. There are also those who will argue that the employees are the customers because they are the ones pulling the healthcare wheel to turn, however, they have no decision how and where the wheel goes. This creates nightmare in the healthcare delivery system.

    So who is the real healthcare customer? Is it that iindividual who presents to a healthcare facility to receive a service, the healthcare provider who renders the required service on behalf of the third party payers, or the third party payers who decide what service to pay for and what not to pay for?


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